Zestimate to double as Zillow’s iBuying offer

Zillow is putting their money where their Zestimate is, at least to a point.

The “Zestimate,” Zillow’s catchy (and soapy) name for estimated home values, will sometimes be used as the initial offer Zillow plans to pay to purchase a home, the company said on Thursday.

Zillow’s own estimated home value is to guide the company on a “limited subset of homes” in 20 markets. The largest of these are Los Angeles, Houston and Phoenix.

The firm’s announcement is an intriguing turn, because it folds up two company priorities into one – boosting consumer faith in the Zestimate, and highlighting Zillow Offers, the company’s instant homebuying, or ibuying, platform.

Even setting aside the various lawsuits that it has spurred, the Zestimate has had bumpy a 15-year journey, such as when former CEO Spencer Rascoff sold his Seattle home for 40 percent below its estimate (Rascoff would continue his seeming battle against the Zestimate, listing an L.A. home last year at $7 million more than its Zestimated price.)

How 2020 exposed a greater need for collaboration between real estate agents and LOs

Technology has given consumers the power of choice and expedited the entire real estate purchasing process. Successful agents, brokerages and loan officers of the future are going to rely significantly on technology to find, nurture and engage with buyers and sellers while also playing an expanding role as personal advisors.

Presented by: Propertybase

In response to a lawsuit over the accuracy of the Zestimate, Zillow in 2017 said the tool was within 5% of the sale price 53.9% of the time, within 10% 75.6% and within 20% nearly 90% of the time.

Still, the Seattle-based firm responded with efforts like computer vision to analyze aerial photos of a home, which followed a public competition, complete with $1 million prize, to improve the Zestimate.

Zillow Offers, meanwhile, came into focus in 2018 when Rich Barton stepped back into the CEO chair. In 2020, the business line accounted for the majority of the company’s revenue and expenses.

Zillow Offers is currently in 25 markets. Though the Zestimate may now dictate an initial offer, a final offer is predicated on a company representative actually visiting the home.

Source: housingwire.com

Zillow, Spoofed on ‘SNL,’ Posts Record Earnings

After being the subject of a Saturday Night Live sketch about lockdown-era millennials fawning over digital home listings, Zillow Group announced record profits for the fourth quarter. So reports Bloomberg.

The company said that surging use of its websites and apps led to adjusted earnings of $170 million during the period, before interest, taxes, depreciation and amortization.

Zillow CEO Rich Barton told Bloomberg in an interview that “the Zillow brand has broken through to a new level of awareness and cultural significance.”

Read the full article from Bloomberg.

Source: themortgageleader.com

Zillow follows Saturday Night Live spoof with record profit

Zillow Group Inc. has cemented its role in the pandemic-era zeitgeist, with “Saturday Night Live”poking fun at homebound millennials who lust after online home listings.

The growing popularity of the company’s websites and apps has also earned the company record profits during the fourth quarter, with adjusted earnings before interest, taxes, depreciation and amortization of $170 million, according to a statement on Wednesday.

That beat the average analyst estimate of $125 million and represented a wide swing from a $3.2 million loss a year earlier period. The results sent shares surging as much as 13% to $193.39. The company’s stock had already jumped more than 600% since bottoming out in March.

The rally comes amid a housing boom in the U.S. that has been fueled by low mortgage rates. With Americans confined to their homes, Zillow scrolling has become a national pastime.

“Because of all the people who are stuck at home, dreaming about a new home, and because of all the millennials having babies and shopping for homes, the Zillow brand has broken through to a new level of awareness and cultural significance,” Zillow Chief Executive Officer Rich Barton said in an interview. “There’s lots more shopping, lots more dreaming, and lots more fantasizing.”

Zillow’s websites and apps received 2.2 billion visits during the fourth quarter. That drove revenue growth in the company’s core marketing business, which brought in $314 million, up 35% from the prior year.

Zillow’s booming marketing operation has shifted the spotlight away from its nascent home-flipping initiative. The company acquired 1,789 homes in the quarter, compared to 1,787 a year earlier, as it returned to pre-Covid purchasing levels after slowing acquisitions earlier in the year.

Zillow also announced it has agreed to pay $500 million to acquire ShowingTime.com Inc., which makes tools for house-hunters to arrange home tours with agents. The purchase fits a key theme in the U.S. housing market in recent months, as socially-distancing efforts and the coming-of-age of millennial homebuyers drives more house-hunting functions online.

That theme has also been good for other companies at the intersection of technology and the U.S. housing market. Shares in brokerage Redfin Corp. have soared, and next-generation home-flipper Opendoor Technologies Inc. went public through a merger with a blank-check company.

Barton said that Zillow, along with consumers, will benefit from the increasing digitization of the homebuying process.

“The seller and the buyer are going to win from more innovation, happening faster,” he said. “It’s long overdue.”

Source: nationalmortgagenews.com

Zillow revenue grows 22% in 2020

Zillow Group reported fourth quarter 2020 revenue of $789 million on Wednesday, easily beating Wall Street’s estimates.

Despite what Zillow officials referred to as a “rough” first half of the year due to COVID-19’s impact on the economy, the $789 million represents a consolidated revenue growth of 22% from 2019.

It also boasted $170 million in earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter, above Wall Street’s estimate of $125 million. For the year 2020, Zillow posted $343 million in EBIDTA.

All of that pushed Zillow into the black during the fourth quarter. The company’s net profits checked in at $46 million in Q4, far above the $101 million loss it suffered in the fourth quarter of 2019. It’s the second consecutive quarter Zillow has been profitable.

Online traffic reached record highs, with 201 million average monthly unique users reported in the fourth quarter of 2020 – the most unique users Zillow has ever had in the fourth quarter of a year, according to officials – and 2.2 billion visits.

For 2020, Zillow reported 9.6 billion visits, up 19% from the previous year.

Zillow also announced it has agreed to pay $500 million to acquire ShowingTime, which makes software for prospective buyers to arrange showings with agents.

The Seattle-based company, which has mostly pivoted from selling advertising to real estate agents into iBuying, acquired 1,789 homes in the fourth quarter. That was just two more homes than they had acquired a year prior, just before COVID-19-related shutdowns froze the business in place.

In a letter to shareholders, Zillow CEO and co-founder Rich Barton and CFO Allen Parker said the company also expects a strong first quarter of 2021.

“Looking ahead, our Zillow economists have made bold predictions for an even stronger housing market in 2021 than what we experienced in 2020,” the letter states. “They are projecting the number of home  sales to grow 21% for the year, as well as double-digit home price appreciation.”

Year over year, Zillow’s IMT segment revenue grew 33% to $424 million, home segment revenue reported $304 million (a fourth quarter 2019-pace), and mortgage segment revenue grew 190% to $61 million. Cash and investments grew to $3.9 billion at the end of the fourth quarter, up from $3.8 billion at the end of the third quarter.

According to Zillow’s own Home Value Index, the company expects seasonally adjusted home values to increase by 3.7% from the end of December 2020 to March 2021, and by 10.5% through December 2021. It also predicts home value appreciation to peak in June 2021 at 13.5%.

The seasonally adjusted annualized rate of existing home sales in November 2020 was 6.69 million – up 25.8% from November 2019, per Jeff Tucker, Zillow senior economist. Officials expect this rate to remain high – above 6.65 million – through 2021. 

“Our bullish outlook for sales and home values is driven by the current strength of the home-buying market and our expectation that low mortgage rates, demographic tailwinds and an improving economy will continue to prop up market competition,” Tucker said.

Expect more technological advances for the company in the new year, the letter to shareholders said.

“We are connecting services together for our customers and using our low cost of customer acquisition across multiple products to compete against an industry of largely single-point  solution providers with high customer-acquisition costs,” it read.

Source: housingwire.com